Key Takeaways
- A restructured agreement gives Microsoft 20% of OpenAI’s total revenue until 2032.
- The new terms allow OpenAI to partner with additional compute providers, ending Microsoft’s exclusive first right of refusal.
- Microsoft owns a 27% equity position in OpenAI Group PBC, currently valued at approximately $135 billion.
- MSFT shares have declined more than 25% since October peaks, currently trading at $397.24.
- The stock’s forward P/E ratio of 24x represents its lowest valuation in almost three years.
Microsoft’s restructured partnership with OpenAI guarantees a 20% revenue share extending through 2032, even as the tech giant’s shares trade at their lowest valuation level in years following a challenging start to 2026.
Microsoft (MSFT) has secured a guaranteed 20% portion of OpenAI’s total revenue extending through 2032, based on reporting from the Information released on Wednesday.
The partnership was renegotiated last fall, expanding upon the initial arrangement that only provided Microsoft with 20% of OpenAI’s revenue through 2030.
The revised structure includes provisions for certain payment deferrals to be distributed in future years.
A significant modification: OpenAI now has freedom to collaborate with alternative compute infrastructure providers. Microsoft’s previous exclusive first refusal rights on compute partnerships have been eliminated.
In October, Microsoft publicly committed to supporting OpenAI’s restructuring into a public benefit corporation (PBC) structure.
Through this transformation, Microsoft obtained a 27% ownership stake in OpenAI Group PBC, which carries an estimated valuation of approximately $135 billion.
The arrangement preserves Microsoft’s exclusive intellectual property licensing and Azure API exclusivity — though these provisions remain in effect only until an independent evaluation committee certifies the achievement of Artificial General Intelligence (AGI).
OpenAI Pursuing $40 Billion Capital Raise
OpenAI is actively pursuing a substantial funding round targeting up to $40 billion, intended to dramatically expand its data center infrastructure.
Major technology suppliers such as Nvidia (NVDA), Amazon (AMZN), and Microsoft are among the potential participants. Negotiations with SoftBank and various Middle Eastern investment entities are currently underway.
The funding round is anticipated to conclude during Q1 2026.
Meanwhile, MSFT shares have experienced significant turbulence. The stock has retreated more than 25% from its October peak, with the majority of losses occurring throughout 2026.
Shares ended trading at $397.24 on February 20, positioned within a 52-week trading band of $344.79 to $555.45.
MSFT Trading at Lowest Valuation Since 2023
Despite the substantial price decline, Microsoft’s underlying business performance remains solid. During Q2 of fiscal year 2026 (concluded December 31), the company delivered 17% year-over-year revenue expansion.
Shares currently command a forward earnings multiple of 24x — representing the most attractive valuation in approximately three years.
For comparison, the S&P 500 index presently trades at a 21.9x forward earnings multiple, positioning Microsoft only marginally above the broader market benchmark.
Azure maintains strong momentum with robust growth rates and substantial backlog of enterprise workloads scheduled for deployment.
Microsoft maintains a market capitalization of $2.9 trillion, operates with a gross margin of 68.59%, and offers shareholders a dividend yield of 1.09%.
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